Egypt poverty levels rising
Cairo - Misguided economic policies, an unfair tax system and lack of planning make millions of poor Egyptians poorer every day, economists said.
“The government is aware of the widening scope of poverty but it is incapable of doing anything to rescue people from poverty,” said Mahmoud al-Asqalani, an economist and anti-poverty campaigner. “Look at the tax system, look at how the wealth is distributed and look at who gets the bulk of subsidies.”
The government said the poverty rate had risen to 27%, the highest since 2000. It also said 11.8 million citizens spend less than $1 a day, 27.9% of family breadwinners are without work and 17.7% of Egypt’s families are supported solely by women.
Economists said people have been deliberately made poor by government policies of the past four decades.
“These policies have only punished the poor and rewarded the rich,” Asqalani said. “More Egyptians will become poor in the future and the poor poorer.”
The government spends tens of billions of dollars every year to subsidise food, water, electricity and fuel for the poor but the rich benefit as much as the poor do, economists said.
Cairo makes subsidised food ration stamps available to both the poor and well-off and sells drinking water and electricity to all at the same rate. A millionaire pays as much as a taxi driver does when they buy fuel at the country’s petrol stations.
The government makes pledges to keep higher income earners out of the subsidy system and charge them more for water and electricity but little changes.
“Our governments have been obsessed with the free market economy but this is a policy that has been followed in a way that eliminated some social classes and pushed millions of people down the social ladder,” consumer rights campaigner Soad al-Deeb said. “This is one reason poverty rates will keep rising.”
Parliament is debating a value-added tax (VAT) bill to replace the sales tax. Economists said, however, that the VAT would increase the cost of commodities mostly consumed by the poor and exempt some purchased by the well-off.
Egypt’s income tax law, economists added, gives massive exemptions to those with the highest incomes under the pretext of encouraging investment.
More than 90% of Egypt’s wealth is concentrated in the hands of less than 10% of the population of 90 million, economists said.
Egypt used to boast a sizeable middle class that included the highly educated, skilled craftsmen and senior government employees who lived a life far from opulent but still decent.
However, the middle class seems to be disappearing. In an article on the news site al-Fagr titled Middle class committing suicide, journalist Adel Hamouda wrote of highly educated people, including doctors and schoolteachers, who left their jobs to take on menial work to be able to put food on the family table.
“This is the crisis of the middle class in our country,” Hamouda wrote. “It is a class that contains people who could not find a chance to go up on the social ladder but had to keep going down.”
Economists said for Egyptians to break the cycle of poverty, they must work and increase production.
“We need to work day and night and increase our productivity,” said Mukhtar al-Sherif, an economics professor from al-Azhar University. “Without work and production, poverty will keep rising without an end.”